A sponsoring company can foot the bill for customer data transfers that involve activities such as downloading a sponsored app, viewing a sponsored online video, or browsing a sponsored website. The data utilized for those activities does not count against the subscriber’s normal allotment of data. In essence, certain online activities are treated just like a toll free call – it’s ironic that the former Ma Bell is the first wireless carrier to introduce this concept.

Sounds like a great idea, right? I’d gladly let Warner Brothers pick up the tab for allowing me to watch a movie trailer on my smartphone. What worries me are the potential negative consequences this arrangement could have on Net Neutrality.

The next logical step for AT&T and other carriers is to propose tiered pricing based on traffic priority. If a sponsor pays 10x the price to place their traffic in the top tier, other data transfers will suffer higher latency and more limited bandwidth.

Imagine a sporting event at which cellular service is already poor due to the high volume of wireless customers concentrated in a small area. Also imagine that Coca Cola pays for an online video advertisement and places the shortened URL on signs around the stadium. In this scenario, Coke has also paid AT&T to prioritize their traffic for a premium price. At halftime, when an AT&T customer views the Coca Cola video on their smartphone, it plays flawlessly. When another AT&T customer tries to check a player’s first half statistics on ESPN.com, the page won’t load. Most of the wireless bandwidth has been diverted to customers interacting with the Coca Cola website and, because of that, all other types of content perform poorly.

This arrangement shifts an open and content-neutral Internet to one in which the best access goes to the highest bidder. It’s an unpleasant scenario, but one that may not be too far in the future.